The International Monetary Fund (IMF) has released a board paper that provides guidance on how countries should draft appropriate policies in relation to cryptocurrencies.
According to a press release on Thursday, Feb. 23, the IMF says this policy advisory document, known as “Elements of Effective Policies for Crypto Assets,” addresses the inquiries of IMF member states on the benefits and risks of cryptocurrencies while including macro-financial considerations such as the effects of these digital assets adoptions on monetary and fiscal policies.
The International Monetary Fund recognizes the ongoing efforts by authorities worldwide to set up effective regulations on crypto assets as the cryptoverse is touted by many for a continuous expansion even amidst the collapse of several exchanges and the failure of some crypto assets in recent years.
Through this policy advisory document, the global lender of last resort lays out a nine-point agenda that they claim will help all nations create a “comprehensive, consistent, and coordinated policy response” to the rising use of crypto assets.
IMF Executive Board Approves Paper On Proposed Crypto Regulations
Deliberating on the board paper, the IMF executive board noted the timeliness and importance of this document to its member states.
Considering various factors such as the growing adoption of cryptocurrency, its extraterritorial nature and that of its developers, and its increasing integrations with the global financial system, they unanimously agreed on the need for a comprehensive, consistent, and coordinated regulatory framework.
However, the 24-man body also commented on the risks that crypto-assets present to world economies, including their potential to sabotage the effectiveness of a monetary policy, bypass capital flow management systems, and aggravate fiscal risks.
They also expressed concerns about various aspects of these digital assets, including their financial stability, financial integrity, legal risks, consumer protection, and market integrity. That said, overall, they stated their support for the board paper and all its elements.
While the IMF listed nine points in the board paper, the first point, which reiterates the IMF’s stance against the adoption of cryptocurrency as legal tender, has been the focus of discussion.
The IMF stated that nations drafting crypto-related policies should “Safeguard monetary sovereignty and stability by strengthening monetary policy frameworks and do not grant crypto assets official currency or legal tender status.”
For a while now, the IMF has been quite vocal against the use of crypto tokens as an official currency. In January 2022, they issued a warning to the Republic of El Salvador, which had adopted Bitcoin as a legal tender, stating the risks associated with the cryptocurrency could make it difficult for the Latin American nation to obtain loans from its institution.
While making its comments on the policy advisory document, the IMF executive board also showed a similar stance by agreeing that the use of crypto assets as legal tender was dangerous to monetary sovereignty and stability.
In other news, the crypto market has been rather stable in recent days, with many assets showing no major price movement. According to data from TradingView, the market leader, Bitcoin is currently valued at $23,927, having gone down by 0.15% in the last 24 hours.
BTC trading at $23,927 | Source: BTCUSD Chart on TradingView.
Featured Image: The ICIR, Chart from TradingView